Study On The Organizational Protection System Of Bondholders’ Interests

In recent years,China’s bond market has gained significant development and is of great importance to serve the real economy and optimizing resource allocation.However,since the first bond default in 2014,the amount and number of bond defaults have continued to rise.The development of the bond market has been affected.The cost of corporate financing has been increasing,and the motivation of bond market investors has been declining.The study of the organizational protection system for bondholders’ interests is conducive to improving investment incentives and reducing corporate financing costs,and is of great significance to stimulate the vitality of the bond market.In China,the bondholders’ meetings and the bond trustees form the organizational protection system of bondholders’ interests.Bondholders’ meetings are often considered to be null and void because of the difficulties in convening and decision-making.Deconstructing the logic of the operation of bondholders’ meetings,it is found that the fundamental reason is the lack of legal rules for bondholders’ meetings,and the ambiguity of relevant rules leads to the poor operation of bondholders’ meetings;the effectiveness of resolutions is unclear,which leads to the inability of bondholders’ meetings to bind bond issuers.In order to rectify the weak position of bondholder meetings,it is necessary to strengthen the institutional supply of bondholder meetings,strictly regulate the procedures for holding bondholder meetings,and give bondholder meetings mandatory guarantees for implementing resolutions.The practical feedback from bond trustees are even more inconsistent with institutional expectations.Bond trustees react indifferently to bond defaults and even harm bondholders’ interests precisely because of the controversial legal nature of bond trustees,which leads to the unclear scope of rights and duties.In addition,the lack of incentives and disciplinary mechanisms makes bond trustees less motivated to perform their duties,and bond trustees are subject to conflicts of interest when they act on behalf of bondholders in bond matters.To enhance the performance of bond trustees,it is necessary to clarify the legal nature of bond trustees,broaden the scope of bond trustees,and adopt additional punitive measures to motivate bond trustees to handle bond defaults.In addition,there is a conflict between the bondholder meetings and the bond trustees in operation,and the positioning of the two is controversial,resulting in the overall poor operation of the organizational protection system.To improve the interface between the bondholder meetings and the bond trustees,it is necessary to first determine the internal positioning of the system and clarify the organizational protection system with the bondholder meetings as the core and the bond trustees as the auxiliary.In addition,it is necessary to increase the interface mechanism to strengthen the auxiliary function of the bond trustees,and it is also necessary to cultivate the autonomy of bondholder meetings to deal with bond defaults.